Iridex Reports Fourth Quarter and Full Year 2023 Financial ResultsAdvances strategic review to unlock shareholder value

2024-03-26

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MOUNTAIN VIEW, Calif., March 26, 2024 (GLOBE NEWSWIRE) -- Iridex Corporation (Nasdaq: IRIX), a worldwide leader providing innovative and versatile laser-based medical systems, delivery devices, and procedure probes for the treatment of glaucoma and retinal diseases, today reported financial results for the fourth quarter and full year ended December 30, 2023, and provided a business update. Fourth Quarter 2023 Results & Recent Highlights Generated total revenue of $12.5 million, compared to $15.2 million in the prior year period Cyclo G6® product family revenue in the fourth quarter of $3.0 million, compared to $4.2 million in the prior year period Sold 12,700 Cyclo G6 probes, compared to 16,400 in the prior year quarter Sold 35 Cyclo G6 Glaucoma Laser Systems in the fourth quarter of 2023, compared to 78 in the prior year quarter Retina product revenue was $7.5 million, representing a decrease of 7% year-over-year Launched new Iridex 532® and Iridex 577® Lasers in U.S. Market in January 2024 Completed clinical protocol and engaged first sites for the RUNWAY Study, a large-scale, multicenter prospective trial to demonstrate the safety and effectiveness of MicroPulse® TLT for post-cataract glaucoma patients Enrolled first patient in UK multicenter registry for MicroPulse TLT clinical studies led by Imperial College Healthcare NHS Trust with over 20 other sites to participate Withdrawal of the restrictive Medicare reimbursement Local Coverage Determinations (LCDs) in late December 2023 that had suppressed U.S. demand for glaucoma systems and probes Cash and cash equivalents as of December 30, 2023 was approximately $7.0 million, a reduction of $1.0 million in the quarter. The previously announced initiatives to reduce operating expenses and cash usage resulted in the lowest quarterly cash use of 2023. Full Year 2023 Results Generated total revenue of $51.9 million, compared to $57.0 million in 2022 Cyclo G6 product family revenue of $13.4 million, a decrease of 9% year-over-year Sold 54,800 Cyclo G6 probes, compared to 59,800 in the prior year Sold 164 Cyclo G6 Glaucoma Laser Systems compared to 237 in the prior year Retina product revenue was $29.4 million, representing a decrease of 7% year-over-year “In the fourth quarter we experienced a combination of unique events that impacted our revenue. These included: (i) the LCDs, which restricted Medicare reimbursement for our laser treatment in moderate glaucoma, and caused surgeons to temporarily reduce orders for procedure probes and defer adoption of laser systems in the US, (ii) continued physician capital equipment purchasing deferrals related to higher financing costs, (iii) supply chain limitations that created a larger than typical yearend backlog, and (vi) the largest impact was from a double-digit decline in orders from key international distributors as they reduced inventory significantly in reaction to our previously-announced strategic options review and Iridex’ launch of new platforms. The aggregate effect was lower revenue in the quarter and weaker than expected overall 2023 performance.” Mr. Bruce continued, “During the first quarter of 2024, we are seeing business flows more consistent with historical pattens, this includes (i) U.S. glaucoma orders trending toward more normalized levels following retirement of the LCDs; (ii) improving seasonally-adjusted capital purchasing trends especially for Pascal® scanning laser systems; (iii) the resolution of the supply chain issues; and (iv) normalizing distributor orders. In January at the Hawaiian Eye and Retina conference we saw continuing interest in our new Pascal scanning laser and introduced our new Iridex 532 and Iridex 577 single spot platform of retina lasers and we intend to capitalize on our improved and refreshed retina portfolio as the year unfolds.” “We have been, and continue to be, actively pursuing our strategic review process since announcing it in the third quarter last year. Discussions are ongoing with multiple parties relating to all aspects of our business, and we are open to any transaction or series of transactions that will benefit our stockholders. We believe we are on track to reach our first agreement on the sale of certain assets soon,” Bruce added. Fourth Quarter 2023 Financial Results Revenue for the three months ended December 30, 2023 was $12.5 million compared to $15.2million during the same period of the prior year. Retina product revenue decreased 7% compared to the prior year period to $7.5 million. Total product revenue from the Cyclo G6 glaucoma product group was $3.0 million, a decrease of $1.2 million versus the fourth quarter of 2022. Other revenue decreased to $2.0 million in the fourth quarter of 2023 compared to the prior year period of $2.9 million, primarily driven by decreased royalties due to expiration of licensed patents and lower service revenue. Fourth quarter revenue was impacted by several factors. In the retina business, deferral of capital purchases led to lower system sales in the U.S. and internationally, international distributors destocked inventory in advance of new laser platform launches and to minimize any potential impact from transactions resulting from Iridex’s strategic review. The Company experienced isolated supply chain limitations which caused deferral of product shipment and elevated order backlog. In glaucoma the reimbursement uncertainty in the U.S. led to temporary softness in glaucoma probe and new system sales. Internationally, the largest distributor significantly reduced normal replenishment orders causing a meaningful decline in probe and systems sales in the quarter. Gross profit for the fourth quarter of 2023 was $4.9 million or a 39.2% gross margin, a decrease compared to $6.7 million, or a 43.9% gross margin, in the same period of the prior year driven by lower overhead absorption and product mix. Operating expenses of $8.0 million in the fourth quarter of 2023 were essentially flat compared to $8.1 million in the same period of the prior year as cost optimization efforts were offset by the cost of ERP implementation and strategic review expenses. Net loss for the fourth quarter of 2023 was $3.0 million, or $0.18 per share, compared to a net loss of $1.1 million, or $0.07 per share, in the same period of the prior year. Cash and cash equivalents totaled $7.0 million as of December 30, 2023. Cash use of $1.0 million in the fourth quarter decreased compared to $1.8 million in the third quarter of 2023. Full Year 2023 Financial Results Revenue for the year ended December 30, 2023 was $51.9 million compared to $57.0 million in 2022. The decrease in revenue was primarily driven by soft fourth quarter results attributable to lower system and probe sales combined with decreased royalty revenue. Retina product revenue was $29.4 million compared to $31.7 million in the prior year, a decrease of 7%, driven by decreased capital system sales and distributor destocking. Total product revenue from the Cyclo G6 glaucoma product family was $13.4 million compared to $14.7 million in fiscal year 2022, driven by lower capital system sales and probe utilization resulting reimbursement uncertainty in the United States and distributor inventory reduction in the fourth quarter. Other revenue was $9.1 million in 2023 compared to $10.6 million in the prior year primarily driven by decreased royalties due to expiration of licensed patents. Gross profit for the full year 2023 was $21.8 million, representing 42.0% gross margin, compared to $25.4 million, or 44.5% gross margin, during the prior year primarily driven by the reduction in royalty revenues and product mix. Operating expenses for 2023 decreased 3% to $31.8 million compared to $32.9 million in the prior year. The decrease in operating expenses is primarily a result of the staffing and planned cost reductions partially offset by one-time expenses related to new ERP implementation. Net loss for 2023 increased to $9.6 million, or $0. 59 per share, compared to a net loss of $7.5 million, or $0.47 per share in the prior year. Webcast and Conference Call Information Iridex’s management team will host a conference call today beginning at 2:00 p.m. PT / 5:00 p.m. ET. Investors interested in listening to the conference call may do so by accessing the live and recorded webcast on the “Event Calendar” page of the “Investors” section of the Company’s website at About Iridex Corporation Iridex Corporation is a worldwide leader in developing, manufacturing, and marketing innovative and versatile laser-based medical systems, delivery devices and consumable instrumentation for the ophthalmology market. The Company’s proprietary MicroPulse technology delivers a differentiated treatment that provides safe, effective, and proven treatment for targeted sight-threatening eye conditions. Iridex’s current product line is used for the treatment of glaucoma and diabetic macular edema (DME) and other retinal diseases. Iridex products are sold in the United States through a direct sales force and internationally primarily through a network of independent distributors into more than 100 countries. For further information, visit the Iridex website at MicroPulse® is a registered trademark of Iridex Corporation, Inc. in the United States, Europe and other jurisdictions. © 2024 Iridex Corporation. All rights reserved. Safe Harbor Statement This announcement contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, including those statements concerning clinical expectations and commercial trends, market adoption and expansion, value-maximizing transactions, demand for and utilization of the Company's products and results and expected sales volumes. The Company can provide no assurance that it will complete any value-maximizing transactions on behalf of its stockholders. These statements are not guarantees of future performance and actual results may differ materially from those described in these forward-looking statements as a result of a number of factors. Please see a detailed description of these and other risks contained in our Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 20, 2023. Forward-looking statements contained in this announcement are made as of this date and will not be updated. Investor Relations Contact Philip Taylor Gilmartin Group investors@iridex.com IRIDEX Corporation Condensed Consolidated Statements of Operations (In thousands, except per share data) (Unaudited) Three Months Ended Twelve Months Ended December 30, 2023 December 31, 2022 December 30, 2023 December 31, 2022 Total revenues $ 12,458 $ 15,195 $ 51,869 $ 56,972 Cost of revenues 7,573 8,531 30,062 31,604 Gross profit 4,885 6,664 21,807 25,368 Operating expenses: Research and development 1,694 1,450 6,829 7,175 Sales and marketing 3,867 4,826 16,237 18,178 General and administrative 2,405 1,798 8,748 7,557 Total operating expenses 7,966 8,074 31,814 32,910 Loss from operations (3,081 ) (1,410 ) (10,007 ) (7,542 ) Other income, net 181 276 527 60 Loss from operations before provision for income taxes (2,900 ) (1,134 ) (9,480 ) (7,482 ) Provision for income taxes 60 14 90 65 Net loss $ (2,960 ) $ (1,148 ) $ (9,570 ) $ (7,547 ) Net loss per share: Basic $ (0.18 ) $ (0.07 ) $ (0.59 ) $ (0.47 ) Diluted $ (0.18 ) $ (0.07 ) $ (0.59 ) $ (0.47 ) Weighted average shares used in computing net loss per common share: Basic 16,245 15,990 16,128 15,938 Diluted 16,245 15,990 16,128 15,938 IRIDEX Corporation Condensed Consolidated Balance Sheets (In thousands) FY 2023 FY 2022 December 30, 2023 December 31, 2022 ASSETS Current assets: Cash and cash equivalents $ 7,034 $ 13,922 Accounts receivable, net 9,654 9,768 Inventories 9,906 10,608 Prepaid expenses and other current assets 856 1,468 Total current assets 27,450 35,766 Property and equipment, net 351 462 Intangible assets, net 1,642 1,977 Goodwill 965 965 Operating lease right-of-use assets, net 2,632 1,665 Other long-term assets 1,396 1,455 Total assets $ 34,436 $ 42,290 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable $ 4,727 $ 3,873 Accrued compensation 1,619 2,448 Accrued expenses 1,996 1,548 Other current liabilities 925 968 Accrued warranty 308 168 Deferred revenue 2,404 2,411 Operating lease liabilities 995 1,037 Total current liabilities 12,974 12,453 Long-term liabilities: Accrued warranty 138 106 Deferred revenue 10,025 11,742 Operating lease liabilities 1,751 732 Other long-term liabilities 26 26 Total liabilities 24,914 25,059 Stockholders’ equity: Common stock 172 169 Additional paid-in capital 88,444 86,802 Accumulated other comprehensive loss (52 ) (24 ) Accumulated deficit (79,042 ) (69,716 ) Total stockholders’ equity 9,522 17,231 Total liabilities and stockholders’ equity $ 34,436 $ 42,290